Are you in a situation currently where you require access to cash for a short-period of time? Then you may be looking at applying for a short term loan online, in order to help you out with a financial emergency, such as an unexpectedly high bill, or perhaps your car suddenly breaking down.
Whatever the reason may be, we understand that taking a loan is something that is never considered lightly, and that you want to find the best deal possible.
But how do you get a short-term loan with the most favourable terms available? Your financial history often determines the kind of deal you get. For example, the better your financial history, the greater the likelihood you will receive a better interest rate for the loan you want to apply for, meaning that it will cost you less to take out a loan with a lender.
In this guide, we take you through some of the best ways to ensure you can get access to the best short-term finance option, and what lenders are assessing you on when they decide to approve you for a loan.
The Best Short Term Loans Will Have:
- High acceptance
- Competitive interest rates
- Allow you to borrow the money you requested
- Will offer same day funding
- Will come from reputable lenders
- No added fees
- Early repayment
Have a Good or Fair Credit Score
One of the things that will have the biggest impact on the interest rate you receive, and whether or not you get accepted for one of the best short-term loan deals on the market, is your credit history. Having a good credit score is highly beneficial when applying for a loan, as lenders will consider you as less of a risk to lend money to, as you may have a history of making loan repayments on time, without any defaults. But what can help you to improve your score?
Things that can improve your score include:
- Limiting the number of applications you make for loans or credit cards. Making too many applications within a short-period of time can concern potential lenders.
- Make sure you are on the electoral roll: this is essential, and provides proof of your identity and your current address.
- Pay all your bills on time
- Keep your credit card balances as low as possible
- Close any unused credit card accounts
- Regularly look at your credit report in order to see if there are any inaccuracies on it that need to be addressed
See our guide from The One Stop Money Shop on how to improve your credit score.
Having a Stable Income
Another factor that can determine whether or not you get one of the best short-term loans available in the market will be whether or not you have a regular monthly income coming through. This can provide assurance to the lender that you are likely to make repayments on any money they lend to you, whereas a lack of stable income make reduce your chances of a loan application being successful.
No Recent Defaults
Unfortunately, something that will have a huge effect on whether or not you are accepted for a short-term loan, or if you are approved, the level of interest you receive on said loan, will be if you have recent defaults on your credit file.
This can signal alarm bells to a potential lender, and may dramatically reduce your chance of being accepted for a short-term loan. After all, it can suggest that if the lender grants you a loan, you may be unable to pay it back. As a result, you may have to look at getting a guarantor for your loan, who can provide security to the lender that regardless of your circumstances, the loan repayments will be made.
Apply With a Direct Lender
Where possible, you should try to apply with a direct lender, like The One Stop Money Shop because this allows you to work with the same company from start to finish and there is no confusion about brokers and other additional fees.
You can use comparison sites to compare short term loans, but when you apply, you can ensure that it is a direct lender by checking the terms of their website – including the footer and terms and conditions.
If you are browsing on a broker or introducer site, you will see phrases like “100% guaranteed approval” and “our panel of lenders” and this will indicate that your application will likely be passed onto other companies and it will not be with a direct lender.
Consider Your Outstanding Loans
It is possible that you may have to pay a higher interest rate for your loan, or be refused for a loan altogether, if the lender sees on your credit report (which they will do when they decide as to whether to approve or decline your short-term loan application) that you have a number of other outstanding loans. This could make a loan provider less inclined to grant you a loan, as it may indicate an inability to handle money in a sensible manner.
It is normal to have a mortgage open, which is practically a big loan, some credit cards and maybe a personal loan. But seeing lots of online payday loans on your credit file, it will raise suspicions and question how you manage your finances – but above all, could put you in greater financial difficulty if you received a new loan.
Consequently, if it is possible in your individual circumstances, you should always try to pay off any outstanding loans that you have before making a new application for a short-term loan, in order to maximise your chances of getting the best interest rate available.